When does an insurance policy become binding?

Question

When you sign the contract or pay the premium?

Answer 1

Neither.  When either the agent says, "coverage is bound" or issues you a written binder which has the effective date on it.

The APPLICATION which you sign, is not binding, unless an agent binds it.  The premium, also, is not binding.

Answer 2

when u sign the contract u agree to pay

Answer 3

Most of the answers you have are incorrect in some technical way, but generally true.  Contracts are generally binding once conditions of insurability are met, assuming they would have issued the policy, and the company accepts money or you sign for the policy and display an intent to pay, but there are exceptions.  The reality is that the time when the policy becomes binding depends on the the particular contract and the lawyer you hire.

The ruling in the case of Dale Sr. went against the company's contract, because the temporary insurance was not binding until he completed all the necessary conditions.  He delayed the exam until after the race that killed him.  Not being able to complete the exam, he was not able to meet the conditions of the temporary insurance.  (I also heard a rumor that the agent wasn't licensed in the state at the time of the temporary contract).  The court still said that the race team should get the death benefit.  The vagueness of the answer played to the benefit of the consumer.

Answer 4

You also have to be "accepted" by the Companys underwriting! Just because you sign the application does NOT complete the process.

Answer 5

Close as makes no difference once the policy has 'incepted', i.e. the date from which the company accepts it is on risk. As previously stated this is not when you sign a proposal form as they can still decline the risk.

Premium payment has nothing to do with it, although obviously they will  cancel the policy pretty d**n quick if you don't pay and can sue you for the time that you were covered.

Sorry the answer is a bit vague, but frankly it depends on what type of insurance you are talking about as to what the exact answer is.

Answer 6

You must pay the premium. Otherwise you could sign the policy and wait for an event to occur before paying the premium. Now, my guess is that if you took out a life insurance policy today, intended to write the check tomorrow, and got hit by a bus this afternoon, the company would still likely pay the benefit to your survivors.

Answer 7

If you send in a policy that is bound, it was bound from the time money was taken. If you send it a policy non-bind, it is considered bound when money is accepted.

Your best bet is to have money down, because if something happens and you haven't paid, you can't collect in most cases.

Answer 8

binding and insurance policy means that you pay your first premium at the time of the application. and if you pass away dureing the underwriting process and the company approves the policy then your beneficiary would receive the death benefit less any premiums due.  if you dont bind the coverage at the time of application and decide to wait until you are approved then the policy is not inforce until you get approved, a policy is issued, you sign the policy delivery receipt and submit first premium.